FRANKFURT (Reuters) - Euro zone governments should not take advantage of the European Central Bank’s latest move to shore up the borrowing costs of heavy debtor states, ECB policymaker Benoit Coeure said, urging fiscal and economic reforms to overcome the crisis.
The ECB agreed this month to launch a new and potentially unlimited government bond purchase program to lower struggling euro zone countries’ borrowing costs, buoying markets’ faith in policymakers’ ability to get on top of the euro zone crisis.
Coeure, who is in charge of market operations on the ECB’s executive board and overlooks the implementation of the new program, stressed the ECB’s commitment to do what it takes to preserve price stability, but that government should do their part.
“The notion that central banks have an unlimited capacity to create money is an illusion and thus cannot be used as an excuse not to reform the economy,” Coeure said in the text of a speech at Sciences Po in Paris on Thursday.
The new bond program was a key element to preserve price stability, Coeure said, adding that central bank independence and a clear focus on price stability were necessary but not sufficient to ensure low and stable inflation under all circumstances.
Reporting by Eva Kuehnen; Editing by Ruth Pitchford